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Flint Hills ends talks with GVEA on North Slope trucking plan; says state entity should explore options

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Posted: Monday, November 19, 2012 5:16 pm | Updated: 1:59 pm, Wed Jan 16, 2013.

I wrote a column last week saying that Flint Hills was still working with GVEA on plans to truck natural gas from the North Slope to Fairbanks.

As of today, that is no longer the case.

Flint Hills says it "has terminated discussions with Golden Valley Electric Association" and while Flint Hills is "opposed to all government mandates and subsidies," the company thinks that a state entity should explore the question of whether there is "sufficient support for the project outside of the industrial demand that Flint Hills has been targeting."

Flint Hills says it will not be building a plant for its needs alone, so it is moving to the sidelines.

The company says that perhaps the Alaska Industrial Development and Export Authority or the Alaska Energy Authority, both state agencies, should figure out what to do next.

Part of what underlies this disagreement is that while GVEA has been seeking a major state grant to help build the project, Flint Hills doesn't like that approach.

For several weeks we have heard that GVEA and Flint Hills were going their separate ways, but GVEA was going to pursue the project.

In terms of what happens  next, it may be that a state-owned plant is an option.

The press release quotes Mike Brose, vice president of Flint Hills Resources Alaska, as saying, "We don't think that we would build the plant for our needs and the needs of other industrial users alone, so we will wait for AIDEA or AEA to do further investigation and present a proposal if they think that is appropriate."

Meanwhile, it appears that the proposal Flint Hills submitted to the State Pipeline Coordinator’s Office for the liquefied natural gas plant will be placed in the question mark category.

Last week,  GVEA President Cory Borgeson said the utility was still seeking a state grant for the project and meeting with AEA sofficials on options for government support.

Flint Hills filed the application Nov. 2 and may have acted because a similar application to build at the same place on the North Slope had been filed by Spectrum, a company headed by Ray Latchem.

Because one application occurred within 30 days of the other, a state rule that the proposals are to be considered on a comparative basis by the Department of Natural Resources has been triggered.

Latchem has said his plan is to provide a cheaper fuel for North Slope industrial operations, with the option of expanding to supply GVEA and other users. 

He said he believes there is room, “both physically and in the market,” for two North Slope plants.

Fairbanks Natural Gas has also filed an application saying it wants to build a small pipeline and plant on the North Slope for a trucking project.

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